Why is good monsoon so important for the economy?

Why is good monsoon so important for the economy?

This year has seen disappointing projections on the monsoon front, rues Devangshu Datta.

India is an unequal society.

How unequal it is can be understood by looking at a few broad statistics.

Services make 57 per cent of gross domestic product (this rises to 65 per cent if we argue construction is a service industry) and employs 25 per cent of workforce (32 per cent including construction).

More, the services sector has consistently grown at rates faster than overall GDP.

Agriculture makes 17 per cent of the GDP.

It employs (or partially employs) two-thirds of the workforce, which depends to some extent on agriculture for earnings.

Manufacturing makes rest of the GDP.

Click NEXT to read further. . .

Image: A farmer plants rice saplings in a paddy field against the backdrop of pre-monsoon clouds in Amritsar.Photographs: Munish Sharma/Reuters

Why is good monsoon so important for the economy?

By most estimates, India will have to create employment for a million (10 lakh) a month for 10 years. Ideally, India will have to find ways to accelerate the movement of the surplus workforce out of agriculture and into manufacturing or service sector employment.

This would be the most practical way to induct a vast workforce, at best semi-skilled.

Till this shift, the economy remains heavily dependent on a good monsoon for a boost to sentiment.

In particular, semi-rural and rural consumption is largely driven by agriculture and that is driven by good rain.

Not only the aggregate rain is important; but the timing too.

Click NEXT to read further. . .

Image: Beachgoers stroll along the Fort Kochi beach while holding umbrellas during a rain shower in Kochi.Photographs: Sivaram V/Reuters